Wrap Text
IMP - Impala Platinum Holdings - Consolidated interim results (reviewed) for
the six months ended 31 December 2010
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP ISIN: ZAE000083648
LSE: IPLA ADR`s: IMPUY
("Implats" or "the Company" or "the Group")
Consolidated interim results (reviewed) for the six months ended
31 December 2010
Safety
Safety performance unsatisfactory
Production
Gross platinum production up 6% to 952 000 ounces
Revenue
Revenue 38% higher, mainly due to increased volumes and stronger dollar metal
prices
Costs
Unit cost per platinum ounce rose by 4%
Gross margin
Healthy gross margin, 33%
Operational
Rustenburg recovery on track, Zimplats and Mimosa continue to meet operational
targets
Dividend
Interim dividend of 150 cents per share
Commentary
The period under review has been one of recovery not only in terms of the global
economy and the improved outlook for our metals but also continuing improvements
at the flagship Impala Rustenburg operation. Development of the three new shafts
at this operation continues with first production from 20 Shaft delivered in
January 2011. These shafts will ensure steady-state production of a million
ounces of platinum by 2014. The Phase 2 expansion at Zimplats, which forms a key
part of our growth strategy, has commenced and is progressing satisfactorily.
Market overview
A somewhat pedestrian recovery in Western world markets was impacted by
stubbornly high unemployment levels in the US and sovereign debt issues
bedevilling the Eurozone. Despite these issues, the economic might of the
developing world - particularly China, has seen platinum continue its recovery
from the lows of calendar year 2008. Prices started the current year at the $1
500 level and ended on highs of $1 750, despite a brief but violent correction
in mid-May following the liquidation of speculative positions in the forward
markets on the back of Eurozone sovereign debt fears. The market performance had
more to do with a surge of money flowing into investment products such as the
Platinum ETF`s which grew by 550 000 ounces during the year following the launch
of the US fund in January, and the paper markets which added around 600 000
ounces. From a physical demand perspective the Chinese automotive market
continued to cement its place as the world`s largest auto market with over 18
million vehicles sold in the year. However, the jewellery market consolidated
somewhat after an extremely robust 2009 when inventories were replenished at
significantly lower prices. A second round of Quantitative Easing (QE 2) in the
US towards the latter part of the year to kickstart the recovery process has
added further liquidity into the market and further supported commodity
purchases. We believe the market was balanced for the year following the growth
in ETF`s.
Palladium was a beneficiary of similar factors, but the effects were further
enhanced by decidedly robust fundamentals given the growth in emerging markets
of gasoline-fuelled and palladium-catalysed vehicles. Palladium ETF`s doubled
during the year to end at 2.2 million ounces and the positions on Nymex ended at
1.7 million, having peaked just north of 2.0 million ounces in the previous
month. As a result the price gained over 85% during the year to end just shy of
$800. The combination of increased offtake from both the automotive and
investment sectors coupled with reduced Russian stock deliveries left the market
in deficit for the period.
The Rhodium market also experienced a volatile year trading between $2 100 and
$2 950, ending the year at $2 425. There has been some evidence of speculative
positioning in this market but clearly not to the extent as seen in the other
metals. We believe the market has been adequately supplied during the year.
Safety
Safety remains a major challenge for the Group and in spite of an intense focus
on safety at all operations, six fatal incidents occurred during this reporting
period. Five of these fatalities were at our Impala Rustenburg operations and
one occurred at Mimosa. The Board, Management and all of our team extend their
sincere condolences to the families and friends of the six employees who died.
As outlined in the annual report we engaged Du Pont Safety Resources to review
and benchmark our safety systems and culture. The major findings of this study
have focused our safety strategy on two main areas, namely supervision and the
safety culture of all employees. In the case of the former, emphasis is on
operational discipline and the role of both the miner and the mine overseer in
safety. In order to change the safety culture to one of acceptance of the
importance of safety in conjunction with compliance, we have incorporated Du
Pont`s cultural assessment recommendations into the strategy.
Du Pont Sustainability Solutions have also been commissioned to provide safety
training to middle and senior management using the DuPont STOP process. Training
has commenced and is scheduled to be completed by June 2011.
Operational review
Group platinum production increased by 6% to 952 000 ounces for the six months
ending December 2010 compared to the corresponding period last year. This was
due to higher throughput at Impala Rustenburg, and the ramp-up to full
production of the Phase 1 expansion at Zimplats. Unit costs were well contained,
rising by 4% to R10 271 as a result of the higher output.
Impala
Five fatalities occurred during the reporting period. The Lost Time Injury
Frequency Rate (LTIFR) deteriorated from 5.09 (FY2010) to 5.38 per million man
hours. The main issue continues to be behavioural non-compliance with and
inadequate enforcement of safety related standards and procedures.
Impala Rustenburg remains on the road to recovery. Tonnes milled improved by 15%
to 7.8 million following the twin impact of the 14 Shaft incident and the strike
which marred the previous interim reporting period. Coupled with a marginal
increase in headgrade, refined platinum production rose by 16% to 500 500
ounces. The higher volumes positively impacted on unit costs which were up 4% to
R10 162 per platinum ounce excluding share based payments.
Operational focus remains on on-reef development at the major shafts. Total
development, including capital, was up 22% with the on-reef component 16% higher
at 45 402 metres. The first of the new generation shafts, 20 Shaft, commenced
production in January 2011.
Capital expenditure increased by 12% to R1.8 billion, the bulk of which was once
again spent on the new shafts.
Zimplats
The safety performance was excellent with no fatalities and only three lost time
injuries recorded during the period. Tonnes milled increased by 6% to 2.08
million reflecting the on-going ramp-up at Bimha Mine which will reach steady
state production later in the year.
The higher throughput coupled with higher mill grades and concentrator
recoveries resulted in platinum production in matte, improving by 9% to 89 000
ounces. Unit costs per platinum ounce in matte rose by 19% to $1 204 (12% to R8
596). This increase is higher than underlying inflation due to stockpile milling
in the corresponding period a year ago.
The Phase 2 expansion to 270 000 ounces of platinum is on track with the
completion of the Portal 3 boxcut scheduled for March 2011. Discussions with
Government regarding the company`s empowerment proposals are ongoing.
Marula
Although the operation achieved another fatality-free reporting period, the
LTIFR is of concern, deteriorating from 9.39 (FY2010) to 11.78 per million man
hours. Over 70% of these accidents are due to material handling and slip-and-
falls. The installation of the new chairlift and further automation of material
handling as well as training initiatives should reduce these types of incidents.
Tonnes milled rose by 9% to 888 000 resulting in a similar increase in platinum
production in concentrate to 41 000 ounces. The labour compliment was
approximately 900 higher in line with the build-up in conventional mining. This
resulted in the unit costs rising by 19% to R14 683 per platinum ounce in
concentrate excluding share based payments.
Mimosa
One fatality occurred during the reporting period, however, the LTIFR improved
from 0.35 (FY2010) to 0.25 per million man hours. In line with steady-state
throughput, tonnes milled and platinum production in concentrate were virtually
unchanged at approximately 1.14 million and 51 000 ounces respectively. Unit
costs per platinum ounce in concentrate rose by 12% to $1 240 (5% to R8 848) due
to an increase in both labour and materials usage costs. The latter was due to
poor ground conditions which required additional support.
Two Rivers
Tonnes milled were unchanged at 1.48 million. Platinum in concentrate production
was in line with this at 73 000 ounces. Costs increased by 18% to R9 473 per
platinum ounce in concentrate due to higher consumable costs, additional spend
on redevelopment and stockpile milling during the comparable period.
Impala Refining Services (IRS)
Platinum production at IRS declined by 2% to 451 000 ounces. The lower volumes
were due to pipeline increases which will reverse before financial year end.
Mineral Resources and Mineral Reserves
There has been no material change to the technical information relating to the
group`s mineral reserves and resources, or legal title to its mining and
exploration activities, as disclosed in the annual report for the financial year
ended 30 June 2010.
Financial review
Basic headline earnings improved by 63% to 345 cents per share from 212 cents. A
key feature in earnings growth was the increase in revenue, which was up by 38%
to R15.3 billion as a result of higher sales volumes (R1.4 billion) and metal
prices (R4.0 billion). The average rand/dollar exchange rate achieved during the
period under review strengthened from R7.70 to R7.16 which resulted in lower
revenue of R1.2 billion. The closing rate of R6.62 compared to R7.39 at the end
of the comparable period resulted in additional foreign exchange transactional
losses of R375 million. The combined effect of the stronger rand is equivalent
to 185 cents per share after tax.
Cost of sales increased by R2.3 billion. The main contributors were metals
purchased (higher volumes and rand metal prices), volume improvement from Impala
Rustenburg and Zimplats (R316 million). Cost of sales was also impacted by
inflation primarily relating to wages, electricity and water (R831 million).
The cumulative effect of revenue strengthening 38% and cost of sales up by 28%
was a gross margin improvement to 33%.
The group unit cost per platinum ounce produced, excluding share based payment
costs escalated 4% to R10 271 per platinum ounce from the comparable period.
Capital expenditure for the half year totalled R2.4 billion, compared to R2.2
billion in the previous half year to December 2009. Of this, R1.8 billion was
spent at Impala, primarily on the development of 16, 17 and 20 Shafts. The
forecast capital expenditure for the balance of financial year 2011 will amount
to approximately R4 billion, and is estimated to be R29 billion for the next
four years. This will be managed in line with the Group`s profitability and cash
flow.
Cash from operating activities for the interim period totalled R2.7 billion
(December 2009: R2.4 billion). Cash net of debt amounted to R115 million
(December 2009: R 941 million).
The Board declared an interim dividend of 150 cents per share which equates to
an increase of 25% on the interim dividend of the comparable period.
Prospects
The growing influence of the emerging market economies and the injection of
further liquidity in the US augurs well for a sustained recovery in world
markets. These coupled with the containment of Europe`s debt problems and
challenging supply prospects will result in tight market conditions for both
platinum and palladium. In line with this the rhodium market is expected to move
back to balance.
The improved operational recovery coupled with the capital and expansion
projects position the Company well to benefit from the improving economic
environment.
Khotso Mokhele David Brown
Chairman Chief Executive Officer
Johannesburg, 17 February 2011
Declaration of interim cash dividend
An interim cash dividend of 150 cents per share has been declared in respect of
the half-year ended 31 December 2010. The last day to trade ("cum" the dividend)
in order to participate in the dividend will be Friday, 04 March 2011. The share
will commence trading "ex" the dividend from the commencement of business on
Monday, 07 March 2011 and the record date will be Friday, 11 March 2011.
The dividend is declared in the currency of the Republic of South Africa.
Payments from the London transfer office will be made in United Kingdom currency
at the rate of exchange ruling on Thursday, 10 March 2011, or on the first day
thereafter on which a rate of exchange is available.
A further announcement stating the rand/GBP conversion rate will be released
through the relevant South African and UK news services on Friday, 11 March
2011.
The dividend will be paid on Monday, 14 March 2011. Share certificates may not
be dematerialised/rematerialised during the period Monday, 07 March 2011 to
Friday, 11 March 2011, both dates inclusive.
By order of the Board
A Parboosing
Group Company Secretary
Johannesburg, 17 February 2011
Approval of the interim financial statements
The interim financial statements for the period ended 31 December 2010, were
approved by the Board of directors on 15 February 2011.
The directors are responsible for the fair presentation to shareholders of the
affairs of the Group as at the end of the interim period, and of the results for
the period, as set out in the interim financial statements. The directors are
responsible for the overall co-ordination of the preparation and presentation,
and approval of the interim financial statements. Responsibility for the initial
preparation of these statements has been delegated to the officers of the Group.
The independent auditors were appointed to perform a review on the financial
statements. The financial statements have been prepared on a going concern
basis, conform with applicable accounting standards and are presented applying
consistent accounting policies supported by reasonable and prudent judgements
and estimates. To discharge this responsibility, the Group maintains accounting
and administrative control systems designed to provide reasonable assurance that
assets are safeguarded and that transactions are executed and recorded in
accordance with sound and ethical business practices and procedures. The
accounting policies of the Group are set out in the annual financial statements
for the year ended 30 June 2010.
K Mokhele DH Brown
Chairman Chief Executive Officer
Statement of financial position
As at As at As at
31 December 31 December 30 June
2010 2009 2010
R millions Notes (Reviewed) (Reviewed) (Audited)
Assets
Non-current assets
Property, plant and 5 30 647 27 666 29 646
equipment
Exploration and 4 294 4 294 4 294
evaluation assets
Intangible assets 1 018 1 018 1 018
Investment in 883 998 934
associates
Available-for-sale 13 40 14
financial assets
Held-to-maturity 59 54 56
financial assets
Receivables and 13 651 13 323 13 781
prepayments
50 565 47 393 49 743
Current assets
Inventories 6 265 5 512 5 382
Trade and other 4 154 3 180 3 588
receivables
Cash and cash 1 720 3 053 3 858
equivalents
12 139 11 745 12 828
Total assets 62 704 59 138 62 571
Equity and liabilities
Equity attributable to
owners of the company
Share capital 14 201 14 108 14 151
Retained earnings 30 465 27 289 30 017
Other components of (862) (471) (376)
equity
43 804 40 926 43 792
Non-controlling 1 944 1 842 1 941
interest
Total equity 45 748 42 768 45 733
Liabilities
Non-current liabilities
Deferred tax liability 7 843 7 268 7 747
Long-term borrowings 6 1 292 1 825 1 827
Long-term provisions 1 545 1 556 1 498
10 680 10 649 11 072
Current liabilities
Trade and other 4 966 5 068 5 147
payables
Current tax payable 98 22 24
Short-term borrowings 6 313 287 301
Short-term provisions 899 344 294
6 276 5 721 5 766
Total liabilities 16 956 16 370 16 838
Total equity and 62 704 59 138 62 571
liabilities
Statement of comprehensive income
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions Notes (Reviewed) (Reviewed) (Audited)
Revenue 15 315 11 122 25 446
Cost of sales 7 (10 294) (8 034) (17 294)
Gross profit 5 021 3 088 8 152
Other operating (381) (310) (585)
expenses
Royalty expense (417) (195) (536)
Profit from operations 4 223 2 583 7 031
Finance income 189 143 321
Finance cost (154) (105) (319)
Net foreign exchange (551) (176) 52
transaction
(losses)/gains
Other (expenses)/income (568) (38) 45
Share of profit of 67 15 95
associates
Profit before tax 3 206 2 422 7 225
Income tax expense (1 054) (1 156) (2 431)
Profit for the period 2 152 1 266 4 794
Other comprehensive
income:
Available-for-sale 3 10 16
financial assets
Deferred tax thereon 0 (2) (4)
Exchange differences on (790) (205) (34)
translating foreign
operations
Deferred tax thereon - 222 59 10
translation
- rate change - - (14)
Total comprehensive 1 587 1 128 4 768
income
Profit attributable to:
Owners of the company 2 070 1 269 4 715
Non-controlling 82 (3) 79
interest
2 152 1 266 4 794
Total comprehensive
income attributable to:
Owners of the company 1 584 1 150 4 691
Non-controlling 3 (22) 77
interest
1 587 1 128 4 768
Earnings per share
(cents per share)
Basic 345 211 786
Diluted 344 211 785
For headline earnings per share and dividend per share refer note 8 and 9.
Statement of changes in equity
Number Share
of shares based
issued Ordinary Share payment
R millions (million)* shares premium reserve
Balance at 30 June 2010 600.44 15 12 146 1 990
Shares issued
Share option scheme 0.10 0 7 0
Employee Share 0.27 0 43 0
Ownership Programme
Total comprehensive
income
Dividends (note 9)
Balance at 31 December 600.81 15 12 196 1 990
2010 (Reviewed)
Balance at 30 June 2009 599.83 15 12 063 1 991
Shares issued
Share option scheme 0.07 0 4
Employee Share 0.22 0 35 0
Ownership Programme
Total comprehensive
income
Dividends (note 9)
Balance at 31 December 600.12 15 12 102 1 991
2009 (Reviewed)
Balance at 30 June 2009 599.83 15 12 063 1 991
Shares issued
Share option scheme 0.13 0 7
Employee Share 0.48 0 76 (1)
Ownership Programme
Total comprehensive
income
Dividends (note 9)
Balance at 30 June 2010 600.44 15 12 146 1 990
(Audited)
*Refer note 8. The table above excludes the treasury shares, Morokotso Trust and
the Implats share incentive scheme as these special purpose vehicles are
consolidated.
Statement of changes in equity (continued)
Foreign
Total Fair currency
share Retained value translation
R millions capital earnings reserve reserve
Balance at 30 June 14 151 30 017 (15) (361)
2010
Shares issued
Share option scheme 7
Employee Share 43
Ownership Programme
Total comprehensive 2 070 5 (491)
income
Dividends (note 9) (1 622)
Balance at 31 14 201 30 465 (10) (852)
December 2010
(Reviewed)
Balance at 30 June 14 069 27 222 (27) (325)
2009
Shares issued
Share option scheme 4
Employee Share 35
Ownership Programme
Total comprehensive 1 269 8 (127)
income
Dividends (note 9) (1 202)
Balance at 31 14 108 27 289 (19) (452)
December 2009
(Reviewed)
Balance at 30 June 14 069 27 222 (27) (325)
2009
Shares issued
Share option scheme 7
Employee Share 75
Ownership Programme
Total comprehensive 4 715 12 (36)
income
Dividends (note 9) (1 920)
Balance at 30 June 14 151 30 017 (15) (361)
2010 (Audited)
*Refer note 8. The table above excludes the treasury shares, Morokotso Trust and
the Implats share incentive scheme as these special purpose vehicles are
consolidated.
Statement of changes in equity (continued)
Total Attributable Non-
other to owners Control-
components of the ling Total
R millions of equity company interest equity
Balance at 30 June (376) 43 792 1 941 45 733
2010
Shares issued
Share option scheme 7 7
Employee Share 43 43
Ownership Programme
Total comprehensive (486) 1 584 3 1 587
income
Dividends (note 9) (1 622) (1 622)
Balance at 31 (862) 43 804 1 944 45 748
December 2010
(Reviewed)
Balance at 30 June (352) 40 939 1 864 42 803
2009
Shares issued
Share option scheme 4 4
Employee Share 35 35
Ownership Programme
Total comprehensive (119) 1 150 (22) 1 128
income
Dividends (note 9) (1 202) (1 202)
Balance at 31 (471) 40 926 1 842 42 768
December 2009
(Reviewed)
Balance at 30 June (352) 40 939 1 864 42 803
2009
Shares issued
Share option scheme 7 7
Employee Share 75 75
Ownership Programme
Total comprehensive (24) 4 691 77 4 768
income
Dividends (note 9) (1 920) (1 920)
Balance at 30 June (376) 43 792 1 941 45 733
2010 (Audited)
*Refer note 8. The table above excludes the treasury shares, Morokotso Trust and
the Implats share incentive scheme as these special purpose vehicles are
consolidated.
Cash flow statement
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions (Reviewed) (Reviewed) (Audited)
Cash flows from operating
activities
Profit before tax 3 206 2 422 7 225
Adjustments to profit before 1 905 1 300 1 648
tax
Cash from changes in working (1 478) (486) (1 184)
capital
Exploration costs (10) (23) (47)
Finance cost (108) (44) (48)
Income tax paid (780) (729) (1 676)
Net cash from operating 2 735 2 440 5 918
activities
Cash flows from investing
activities
Purchase of property, plant (2 358) (2 211) (4 412)
and equipment
Proceeds from sale of
property, plant and
equipment 5 3 13
Proceeds from investments 1 8 8
disposed
Purchase of investments - (27) 0
Payment received from
associate on
shareholders` loan 112 - 196
Loan repayments received 127 442 442
Net advances (739) - (106)
Finance income 120 110 259
Net cash used in investing (2 732) (1 675) (3 600)
activities
Cash flows from financing
activities
Issue of ordinary shares, net 50 39 82
of cost
Lease liability repaid (9) (10) (18)
Repayments of borrowings (464) (50) (136)
Proceeds from borrowings - 170 176
Dividends paid to company`s (1 622) (1 202) (1 920)
shareholders
Net cash used in financing (2 045) (1 053) (1 816)
activities
Net (decrease)/increase in (2 042) (288) 502
cash and cash equivalents
Cash and cash equivalents at 3 858 3 348 3 348
beginning of period
Effect of exchange rate (96) (7) 8
changes on cash and cash
equivalents held in foreign
currencies
Cash and cash equivalents at 1 720 3 053 3 858
end of period
Segment information
The Group distinguishes its segments between mining operations, refining
services (which include metals purchased and toll refined) and other.
Operating segments have consistently adopted the consolidated basis of
accounting and there are no differences in measurement applied.
The statement of comprehensive income shows the movement from gross profit to
profit before income tax.
Summary of business segments:
Six months ended Six months ended Year ended
31 December 2010 31 December 2009 30 June 2010
(Reviewed) (Reviewed) (Audited)
Gross Gross Gross
R millions Revenue profit Revenue profit Revenue profit
Mining
Impala 14 733 2 896 10 685 2 019 24 541 5 368
Mining 8 303 2 927 6 361 1 953 14 025 5 222
Metals 6 430 (31) 4 324 66 10 516 146
purchased
Zimplats 1 784 1 018 1 312 617 3 052 1 571
Marula 748 29 565 8 1 130 (11)
Mimosa 558 303 459 201 1 032 495
Inter- (2 955) 39 (2 219) (254) (4 964) (399)
segment
adjustment
External 14 868 4 285 10 802 2 591 24 791 7 024
parties
Refining 6 876 767 4 481 527 11 069 1 188
services
Inter- (6 429) (31) (4 161) (30) (10 414) (60)
segment
adjustment
External 447 736 320 497 655 1 128
parties
Total 15 315 5 021 11 122 3 088 25 446 8 152
external
parties
Capital Capital Capital
expen- Total expen- Total expen- Total
R millions diture assets diture assets diture assets
Mining
Impala 1 843 39 194 1 648 37 428 3 435 39 106
Zimplats 365 5 149 391 4 510 698 5 818
Marula 88 3 204 103 2 888 281 3 182
Mimosa 123 1 452 37 1 269 127 1 567
Afplats 1 7 224 9 7 221 13 7 220
Total 2 420 56 223 2 188 53 316 4 554 56 893
mining
Refining 5 420 4 681 4 571
services
Other 1 061 1 141 1 107
Total 2 420 62 704 2 188 59 138 4 554 62 571
Notes to the interim financial information
1. General information
Impala Platinum Holdings Limited (Implats) is a leading producer of platinum and
associated platinum group metals (PGMs). The Group has operations on the
Bushveld Complex in South Africa and the Great Dyke in Zimbabwe, the two most
significant PGM - bearing ore bodies globally.
The Company has its primary listing on the JSE Limited and a secondary listing
on the London Stock Exchange.
The condensed consolidated interim financial information was approved on 15
February 2011 by the Board of directors.
2. Independent review by the auditors
The consolidated statement of financial position at 31 December 2010 and the
related consolidated statement of comprehensive income, statement of changes in
equity and cash flow statement for the six months then ended were reviewed by
the Group`s auditors, PricewaterhouseCoopers Inc. The individual auditor
assigned to perform the review is Mr JP van Staden. Their unqualified review
conclusion is available for inspection at the Company`s registered office.
3. Basis of preparation
The consolidated interim financial information for the six months ended 31
December 2010 has been prepared in accordance with International Financial
Reporting Standards (IFRS) of the International Accounting Standards Board (in
particular IAS 34, `Interim financial reporting`), the AC 500 standards as
issued by the Accounting Practices Board or its successor, requirements of the
South African Companies Act, 1973 as amended and regulations of the JSE Limited.
The condensed consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended 30 June
2010, which have been prepared in accordance with IFRS.
The consolidated interim financial information has been prepared under the
historical cost convention except for certain financial assets, financial
liabilities and derivative financial instruments which are measured at fair
value and liabilities for cash-settled share-based payment arrangements which
are measured with a binomial option model.
The consolidated interim financial information is presented in South African
rands, which is the Company`s functional currency.
4. Accounting policies
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 30 June 2010, as
described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would
be applicable to expected total annual earnings.
The following new standards, amendments to standards and interpretations have
been adopted by the Group as from 1 July 2010:
- Annual Improvement Project: May 2010 (effective from 1 July 2010). These
amendments have no impact on the results of the Group.
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
(effective 1 July 2010). This new interpretation has no impact on the results of
the Group.
5. Property, plant and equipment
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions (Reviewed) (Reviewed) (Audited)
Opening net book amount 29 646 26 224 26 224
Additions 2 420 2 149 4 476
Interest capitalised - 39 78
Disposals (7) (2) (8)
Depreciation (note 7) (690) (516) (1 083)
Exchange adjustment on (722) (228) (41)
translation
Closing net book amount 30 647 27 666 29 646
6. Borrowings
Borrowings from Standard Bank Limited:
- Loans were obtained by BEE partners for purchasing a 27% share in Marula
Platinum (Proprietary) Limited amounting to R775 million (June 2010: R775
million). The BEE partnership in Marula is consolidated as the loans are
guaranteed by Implats. The loans carry interest at the Johannesburg Interbank
Acceptance Rate (JIBAR) plus 130 (June 2010: 130) basis points and a revolving
credit facility amounting to R114 million (June 2010: R117 million), which
carries interest at JIBAR plus 145 (June 2010: 145) basis points. The loans
expire in 2020.
- Two loan facilities from Standard Bank of South Africa Limited to finance the
Ngezi Phase One expansion at Zimplats were secured.
Loan 1 of R530 million (June 2010: R614 million) is denominated in US$ for US$80
million and bears interest at London Interbank Offering Rate (LIBOR) plus 700
basis points (June 2010: 700 basis points). Repayments of 12 quarterly
instalments commenced in December 2009 and will be fully settled by December
2012. At the end of the period the outstanding balance amounted to R183 million
(US$17 million) (June 2010: R484 million (US$63 million)).
Loan 2 of R500 million (June 2010: R500 million) is denominated in South African
rand and bears interest at JIBAR plus 700 basis points (June 2010: 700 basis
points). This loan is repayable in 10 semi-annual instalments commencing in
December 2010 and will be fully repaid by June 2015. At the end of the period
the outstanding balance amounted to R286 million (June 2010:
R490 million).
These loans are secured by sessions over cash, debtors and revenue of Zimplats
Mines.
The total undrawn committed facilities at the end of the period were R3.4
billion (June 2010: R3.4 billion).
7. Cost of sales
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions (Reviewed) (Reviewed) (Audited)
Included in cost of
sales:
On-mine operations 5 439 4 595 8 796
Wages and salaries 2 734 2 255 4 703
Share-based compensation* 490 521 305
Materials and other 1 918 1 605 3 341
mining costs
Utilities 297 214 447
Concentrating and 1 309 1 090 2 257
smelting operations
Wages and salaries 247 206 446
Materials and other costs 682 584 1 208
Utilities 380 300 603
Refining operations 458 403 764
Wages and salaries 174 160 328
Share-based compensation 52 47 33
Materials and other costs 190 159 333
Utilities 42 37 70
Depreciation of operating 690 516 1 083
assets (note 5)
Metals purchased 3 241 2 690 5 522
Change in metal (843) (1 260) (1 128)
inventories
10 294 8 034 17 294
*Includes concentrating and smelting
8. Headline earnings
Headline earnings attributable to equity holders of the company arises from
operations as follows:
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions (Reviewed) (Reviewed) (Audited)
Profit attributable to 2 070 1 269 4 715
owners of the company
Adjustments net of tax:
Profit on disposal of 0 (1) (4)
property, plant and
equipment
Loss on disposal of - 6 7
investment
Headline earnings 2 070 1 274 4 718
The issued share capital
of the holding company is
as follows (millions):
Number of shares issued 631.71 631.58 631.71
Treasury shares (16.23) (16.23) (16.23)
Morokotso Trust (14.64) (15.17) (14.91)
Implats Share Incentive (0.03) (0.06) (0.13)
Trust
Number of shares issued 600.81 600.12 600.44
outside the group
Adjusted for weighted (0.22) (0.10) (0.28)
shares issued
Weighted average number 600.59 600.02 600.16
of ordinary shares in
issue for basic earnings
per share
Adjustment for share- 0.34 0.47 0.34
based compensation
Weighted average number 600.93 600.49 600.50
of ordinary shares for
diluted earnings per
share
Headline earnings per
share (cents)
Basic 345 212 786
Diluted 344 212 786
9. Dividends
On 17 February 2011, a sub-committee of the Board declared an interim dividend
in respect of 2011 of 150 cents per share amounting to R901 million. Secondary
Tax on Companies on the dividend will amount to R90 million.
These financial statements do not reflect this dividend and related STC payable.
The dividend will be accounted for in shareholders equity as an appropriation of
retained earnings in the year ending 30 June 2011.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R millions (Reviewed) (Reviewed) (Audited)
Dividends paid
Final dividend No. 85 for
2010 of 270
(June 2009: 200) cents per 1 622 1 202 1 202
share
Interim dividend No 84 for 718
2010 of 120 cents per share
1 622 1 202 1 920
10. Contingent liabilities and guarantees
As at December 2010 the Group had contingent liabilities in respect of bank and
other guarantees and other matters arising in the ordinary course of business
from which it is anticipated that no material liabilities will arise.
Total guarantees decreased by R3 million during the six months to an amount of
R597 million (June 2010: R600 million).
Additional Profits Tax (APT)
As reported during June 2010, Zimplats accepted an APT assessment of $23.5
million issued by the Zimbabwe Revenue Authority (ZIMRA) in 2009 in respect of
the period 2001 to 2007 and has paid the assessed amount in full.
In December 2010, the audit section of ZIMRA reviewed the APT assessment and
concluded that the deduction of income tax assessed losses in the derivation of
net cash receipts, on which APT is chargeable if positive, was incorrect. ZIMRA
has thus issued an amended APT assessment of which the effect of the
disallowance is an additional APT liability of $26.9 million.
Management and the company`s tax advisers strongly disagree with the ZIMRA
interpretation of the deduction provisions of the 22nd and 23rd Schedules of the
Income Tax Act and accordingly, an objection to the amended assessment has been
lodged. A response to the objection is yet to be received.
In the event that the response to the objection is negative, it is the
Management`s intention to seek legal redress.
11. Commitments
Capital expenditure approved at 31 December 2010 amounted to R23.7 billion (June
2010: R20.4 billion), of which R3.8 billion (June 2010: R2.6 billion) is already
committed. This expenditure will be funded internally and if necessary, from
borrowings.
12. Related party transactions
The Group entered into purchase transactions of R1 068 million (December 2009:
R938 million) (June 2010: R2 044 million) resulting in an amount payable of R667
million (December 2009: R586 million) (June 2010: R615 million) to Two Rivers
Platinum, an associate company. It also received refining fees and interest to
the value of R18 million (December 2009: R28 million) (June 2010: R56 million).
After capital repayments received during the period the shareholders loan
amounted to R232 million (December 2009: R539 million) (June 2010: R343
million). These transactions are entered into on an arm`s length basis at
prevailing market rates.
Key management compensation:
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R 000 (Reviewed) (Reviewed) (Audited)
Non-executive directors 2 792 4 179 6 423
remuneration
Executive directors 19 699 20 098 37 800
remuneration (fixed and
variable)
Senior executives and 24 441 15 095 33 855
group secretary*
Total 46 932 39 372 78 078
*Increase mainly resulting from share options exercised.
13. Net asset value
Net asset value based on the number of ordinary shares issued outside the group
is 7 291 cents per share (June 2010: 7 294 cents per share).
Operating statistics
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2010 2009 2010
Gross refined
production
Platinum (000oz) 952 895 1 741
Palladium (000oz) 623 582 1 238
Rhodium (000oz) 129 126 252
Nickel (000t) 8.4 7.5 15.2
IRS metal returned
Platinum (000oz) 124 126 233
Palladium (000oz) 123 126 259
Rhodium (000oz) 25 26 49
Nickel (000t) 1.9 0.9 2.8
Sales volumes
Platinum (000oz) 801 694 1 435
Palladium (000oz) 477 466 945
Rhodium (000oz) 109 120 228
Nickel (000t) 8.4 6.8 12.8
Prices achieved
Platinum ($/oz) 1 596 1 281 1 433
Palladium ($/oz) 554 298 376
Rhodium ($/oz) 2 253 1 764 2 149
Nickel ($/t) 21 795 16 032 18 981
Consolidated
statistics
Average rate (R/$) 7.16 7.70 7.58
achieved
Closing rate for the (R/$) 6.62 7.39 7.67
period
Revenue per platinum ($/oz) 2 624 2 051 2 316
ounce sold
(R/oz) 18 788 15 793 17 555
Tonnes milled ex- (000t) 11 341 10 176 20 309
mine
PGM refined (000oz) 1 946 1 802 3 689
production
Capital expenditure (Rm) 2 420 2 188 4 554
Group unit cost per
platinum ounce
Excluding share- ($/oz) 1 439 1 297 1 335
based cost
(R/oz) 10 271 9 889 10 089
Including share- ($/oz) 1 571 1 439 1 379
based cost
(R/oz) 11 212 10 974 10 417
Additional statistical information is available on the Company`s internet
website.
Implats` vision
To be the world`s best platinum-producing company, delivering superior returns
to shareholders relative to our peers.
Implats` values
- Safeguarding the health and safety of our employees, and caring for the
environment in which we operate
- Acting with integrity and openness in all that we do and fostering a workplace
in which honest and open communication thrives
- Promoting and rewarding teamwork, innovation, continuous improvement and the
application of best practice by being a responsible employer, developing people
to the best of their abilities and fostering a culture of mutual respect among
employees
- Being accountable and responsible for our actions as a company and as
individuals
- Being a good corporate citizen in the communities in which we live and work.
Registered Office: 2 Fricker Road, Illovo 2196
(Private Bag X18, Northlands 2116)
Transfer Secretaries:
South Africa: Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
United Kingdom: Computershare Investor Services plc
The Pavilions, Bridgwater Road, Bristol, BS13 8AE
Directors: Dr K Mokhele (Chairman), DH Brown (Chief Executive Officer), HC
Cameron, NDJ Caroll#, PA Dunne, M Gantsho, TP Goodlace, JM McMahon*, MV Mennell,
TV Mokgatlha, B Ngonyama, NDB Orleyn, M Pooe.
*British #Alternate to TV Mokgatlha.
Note: Mr LJ Paton resigned on 31 October 2010
Ms D Earp resigned on 17 January 2011
A copy of the interim report is available on the Company`s internet website:
http://www.implats.co.za
Alternatively please contact the Company Secretary, via e-mail at
avanthi.parboosing@implats.co.za or by post at Private Bag X18, Northlands 2116,
South Africa
or telephone (011) 731 9000.
Johannesburg, 17 February 2011
Sponsor: Deutsche Securities SA (Pty) Limited
Date: 17/02/2011 08:00:03 Supplied by www.sharenet.co.za
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